The use of digital payments is rapidly increasing in India, and millions of people transact through UPI daily. Following the recent wallet inactivity notification sent by PhonePe to some users, many have wondered whether additional fees will now be deducted from UPI transactions or bank accounts. Amidst the growing debate, PhonePe has clarified that the wallet inactivity fee is limited to the PhonePe Wallet and will not impact payments made through UPI or bank accounts.
According to PhonePe, this fee applies only to wallets that are not used for a long period of time. The company clarified that the PhonePe Wallet is a prepaid payment instrument (PPI), while UPI is a separate system in which funds are transferred directly from the user’s bank account.
This is why it would be wrong to consider wallets and UPI to be the same thing. Both are separate systems and have different rules. If a user’s wallet remains inactive for a long period of time, the rules apply to that account, not to the bank account or UPI.
Many users complained that they make payments through PhonePe daily, yet why did they receive an inactivity message. The company explained that UPI and Wallet activities are recorded separately.
This means that if a person is scanning a QR code, paying a bill, or transferring money, but not using the PhonePe Wallet, their wallet may be considered inactive. In such cases, an inactivity alert may be sent.
PhonePe has clearly stated that if there is insufficient balance in the wallet, the fee will not be deducted from the user’s bank account or UPI. This means that your bank balance will remain completely safe.
The company states that the fee can only be deducted from the available funds in the wallet. There will be no automatic deduction from the bank account or linked UPI account.
According to the company, a notification is sent to the user approximately 15 days before any charges are deducted. During this time, the customer can reactivate the wallet, add funds, withdraw balance, or even close the wallet if needed.
Interestingly, full KYC is not required to reactivate the wallet. Generally, it can be reactivated by OTP verification and a transaction from the wallet.
Confusion regarding cashback also cleared
PhonePe also explained that many users assume that their cashback is directly deposited into their wallet. However, in most cases, the cashback amount is credited to a separate gift card balance.
This means that merely receiving cashback will not be considered an active wallet, and the rules for inactivity fees on cashback balances may also differ.
PhonePe’s latest clarification makes it clear that it is not correct to consider UPI payments and PhonePe Wallet the same thing. If you pay only through UPI, you don’t need to worry about any additional charges. However, users who have balance in their PhonePe Wallet should check its status from time to time.